Ill-considered technology investments are similar to a Trojan horse. New technology is integrated with the IT infrastructure with fanfare and welcomed adoption. Then, over time, that shiny beacon of business improvement and future success becomes a threat — or worse, an obstacle — to achieving the ultimate vision.
Such an experience can compel executives to resist future digital investments. But when you consider Forbes Insight’s revelation that nearly three-quarters of global CEOs believe the next three years will be more critical for their industry than the last half century, this view is nothing more than a massive mistake. In fact, every company can stand to benefit from generating 50 percent or more of its revenue from a digital ecosystem, which leads to 32 percent higher growth and 27 percent more profit margin, according to MIT Sloan Management Review.
It’s Time to Take a Lean, Four-Step Approach to Digital Decision-Making
The turmoil of digital disruption is causing most CIOs to reevaluate their digital approach. Over the last seven years, creating an IT landscape that is transformational and strategic took higher priority than keeping the lights on and building functionality. Now executives are placing greater emphasis on accelerating time to market, increasing innovation capabilities, enhancing data and system security, as well as reducing cost and complexity. More importantly, top management wants to see the benefits of existing digital investments before moving forward with new ones.
In response, many businesses are taking advantage of a four-step approach inspired by lean-management practices.
- Diagnosis: Thousands of key performance indicators (KPIs) are scanned on the digital landscape to determine IT agility, security, business process efficiency, and cost effectiveness. Based on this information, the company gains an accurate picture of its strengths, weaknesses, and threats — internal and external.
- Internal and external benchmarking: By leveraging the insight from step one, businesses can pinpoint the greatest potential for improvement, which may include business processes such as order-to-cash and pay-to-profit. Building a business case helps justify the investment in context with capital and resources required, payback timeframe, or ROI expected.
- Simulation: A predictive algorithm uses this insight to list potential improvements and action plans scaled by duration, cost, measurable benefits, and degree of change, as well as financial capability, availability, and expectations.
- Improvement: Once the improvement project is chosen, businesses can achieve a high level of transparency, clear understanding of its connection with other initiatives, and consistent measurement of KPIs.
When it comes to digital transformation, knowledge helps ensure that every investment delivers as expected. By building a business case with this information and insight, CIOs and IT leaders can frame the decision-making process around realistic expectations, a clear sense of actual impact and influence, and the best sequence to execute it.
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